Employer Childcare Tax Credit

Check out the information below to find out more about available childcare assistance tax credits. Participating businesses can provide childcare onsite or contract with local childcare facilities. They can also work with third-party intermediaries to contract with one or more childcare facility or provider. If you’re interested in partnering with the Childcare Coalition of Dodge City, contact Mollea Lightner at 620-227-9501 or molleaw@dodgedev.org.

Federal Childcare Assistance Tax Credits

The Federal Employer-Provided Childcare Credit (45F) encourages employer to be part of community childcare solutions through reimbursement of a portion of the cost of providing childcare.

  • All privilege taxpayers who are employers (C-corps, S-corps, partnerships, LLCs, other passthrough entities).

    • Costs associated with acquiring, constructing, rehabilitating, or expanding property used for a qualified child care facility.

    • Operating costs of a qualified child care facility.

    • Costs incurred under a contract with a qualified child care facility to provide child care services to employees.

    • Payments made through third-party intermediaries contracting with qualified child care providers.

    • Qualified resource and referral expenditures, which are the costs incurred to help employees find child care services (the credit for these expenses is 10%.)

    • The Working Families Tax Cut Act increased the credit percentage to 40% (previously 25%) for most employers and 50% for eligible small businesses.

    • The maximum annual credit has been increased to $500,000 (previously only $150,000) and up to $600,000 for eligible small businesses.

  • The credit can now be claimed for payments made through third-party intermediaries who contract with qualified child care providers. The credit also explicitly permits its use for jointly owned or operated child care facilities.

Kansas Childcare Assistance Tax Credits

  • All privilege taxpayers who are employers (C-corps, S-corps, partnerships, LLCs, other pass-through entities).

  • Category 1: Expenses related to the provision of child care for an organization’s employees

    • Paying for childcare for employees

    • Establishing or expanding a child care program that is primarily used by employees

    • Paying for referral services that connect employees to childcare providers

    • Collaborative childcare investment (with other employers)

    Category 2: Employer/Business contributions to a third party that expands the availability of community childcare options

    • Establishing or expanding a childcare program, including support to establish or maintain licensing

    • Enabling a program to purchase learning materials or play equipment

    • Professional development for childcare staff

    • Childcare tuition assistance for families in need

    • Referral services that connect families to childcare providers

    Community Childcare is defined as a for profit or not for profit provider of childcare services open at least 9 hours per day and located within 45 miles of the employer, or employers offices, seeking the credit

    • Category 1: 75% up to $100,000

    • Category 2:

      • 75% up to $100,000 if the recipient accepts and serves children/families with child care subsidy

      • 50% up to $100,000 if the recipient does not accept/serve children/families with childcare subsidy

  • The tax credit is no longer refundable. However, it contains a three year carry forward. A carryforward tax credit allows taxpayers to apply unused tax credits from a current tax year to future tax years, reducing future liability when credits exceed the current year's tax limit.